News Article of Senator Crapo
BUDGETING FOR SECURITY AND EFFICIENCY
Guest opinion submitted by Idaho Senator Mike Crapo
Contact: Susan Wheeler
Prioritization is key to responsible personal and business budgeting. Financial needs should be carefully examined keeping in mind current realities and the longer view over years. Funding sources must be evaluated for their reliability.
When it comes to the federal budget, the process gets even more complicated. Priorities must be established. Tough fiscal realities face us at all levels, dictating allocation of scarce federal funding resources. Unlike employment or business income these sources—namely, taxes--have to be evaluated today and projected years ahead in the language of dollar amounts and in the context of the role of the federal government in providing for certain programs. Costs to the taxpayer must be weighed with the benefits. Which taxes impose onerous burdens with little overall gain? What do the supply and demand aspects of programs such as Social Security, Medicare and Medicaid look like today? Even more important, what does the future hold? Not easy questions to answer, but ones that must be carefully considered.
When the Administration presented its budget last year, we were facing realities of war, unchecked growth in entitlement spending, a large deficit and the need to encourage job growth. This year, some things haven’t changed. National security budgeting priorities remain; the deficit, while shrinking, is unacceptable; and current and projected growth in entitlement spending over the next few decades is truly sobering. Less than 25 years from today, almost 20 percent of Americans will be over 65, needing services provided through Social Security, Medicare and Medicaid. The problem: the population sector needed to fund these programs (if left unimproved) as the years pass is steadily decreasing. This means that our children and grandchildren will pay significantly higher taxes than we do, to care for our generation. We cannot allow this to happen.
Last year, many called for tax hikes. After all, with more money in the pot, certainly then we would see relief and reductions in overall indebtedness--or so it would seem. But the numbers reveal a very different trend. Looking at just the examples of tax cuts on capital gains and dividends, a refreshing picture emerges as factual testament to the importance of greater income in the marketplace rather than in federal pockets.
Before tax cuts were enacted in 2003, the bipartisan Congressional Budget Office (CBO) projected a two-year growth in capital gains and dividends revenue of $125 billion. A year later, after tax cuts were enacted, the CBO projected two-year revenues for 2004 and 2005 of $98 billion. Yet, just last month, the receipts came in for 2004 and 2005, totaling $151 billion--$53 billion more than expected and $26 billion more than the CBO had predicted without tax cuts in place.
There are positive aspects to our budget outlook. With two years of tax cuts in place, revenues have increased, demonstrating a thriving economy. We find ourselves in a dynamic time of job growth. Idaho experienced an historic low in unemployment in December at 3.4 percent, representing a drop in claims from December 2004 of over 27,000.
In order to maintain this momentum, we must continually evaluate government programs for effectiveness. We must make the tax cuts permanent--their success is indisputable. Protection of our freedoms and our safety are not incompatible and defense at home and abroad are clear priorities. A sound, fiscally-responsible federal budget ensures national priorities and promotes efficiency in government operations.
As a member of the Senate Budget Committee, I look forward to working on the Administration’s recommendations in the Fiscal Year 2007 budget, presenting one to Idahoans that accurately reflects national priorities while emphasizing fiscal discipline.
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